It seems like it won’t be long before everyone in Singapore is making transactions with digital coins.
Senior Minister Tharman Shanmugaratnam, the chairman of the Monetary Authority of Singapore (MAS), has remarked on the future of cryptocurrency and its future functionality in Singapore.
“There may be a role for crypto in future finance that extends beyond pure speculation and illicit finance,” he said at the Asia Financial Markets Forum earlier today (October 28).
It’s a vote of confidence in the use of cryptocurrency and specifically stablecoins, albeit a move to approach with caution.
A future for cryptocurrency in Singapore
Since the advent of cryptocurrency and the increasing popularity of Bitcoin, governments have always been wary of this decentralised form of currency.
Of course, these fears are not unfounded. While cryptocurrency is regulated by the Payment Services Act, Singapore is still cautious about fully embracing this form of currency.
However, seeing Singapore is slowly building its status as a crypto-technology hub. Notable local cryptocurrency startups such as Coinhako are pioneering the movement, and there is now a better framework for trading, listing, tokenisation, and custody.
Still, Singapore is very much in its infancy stage, and we’ve been rather conservative about incorporating cryptocurrency into the financial space.
For example, MAS has recently awarded Major Payment Institution licences to DBS Vickers (DBSV), a brokerage arm of DBS Bank and Australia-based crypto exchange Independent Reserve, to provide digital payment token services here.
Stablecoins as the first step
“I think the future will be one where regulated stablecoins will have a useful role in a traditional payment system that innovates and becomes more interoperable across borders for cheap, fast and instant payments,” said SM Tharman in a separate dialogue with Bloomberg News.
Stablecoins are a crypto subset often pegged to fiat currencies such as the dollar. This way, stablecoins can have a role with traditional payment systems that can be better regulated for illicit finance activities.
The central bank is keeping an “open mind” on cryptocurrencies because the regulator wants technologies and innovation to develop, said Tharman, one of Singapore’s most influential politicians who has held roles in organisations such as the International Monetary Fund.
Rather than using the word crypto, Tharman said he prefers to approach the topic through a fintech lens, whereby such technologies have the potential to help large underserved markets and segments of the population that struggle to get unsecured financing.
In addition, fintech has given a “useful jolt” to the system, with banks responding to the challenge, lowering costs and improving the reliability of financial services, he said.
Despite all this progress, SM Tharman still does not see cryptocurrencies wholly replacing money as legal tender. “If you have an instrument that is volatile in pricing, it’s never going to become money,” he said.
Tharman maintains that cryptocurrencies are still a speculative asset. Perhaps, the best we can hope for is the integration of cryptocurrencies into our financial system, and that’s the happy medium we can achieve.
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Featured Image Credit: Bloomberg.com